November 30, 2011

Positive economics is in principle independent of any particular ethical position or normative judgments. As Keynes says, it deals with "what is," not with "what ought to be." Its task is to provide a system of generalizations that can be used to make correct predictions about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields.

We should cut early, as deep as is feasible given time-tabling constraints. We need growth, and early cuts are likely to promote growth, even in the short term. There are three reasons why. First, at lower levels of public spending the economy is likely to grow faster. If the economy grows faster, then wages will grow faster. So households today will feel safe to borrow and consume more and to save less, knowing that their (pre-tax) incomes will be higher later, allowing them to pay off their debts. Investors will also expect better returns if growth is faster...

[The Office for Budget Responsibility] expect GDP in Britain to grow this year by 0.9% – and by 0.7% next year...The OBR have significantly reduced their assumptions about the spare capacity in the economy – and the trend rate of growth. And this increases their estimate of the proportion of the deficit that is structural – in other words, the part of the deficit that doesn’t disappear even when the economy recovers. So our debt challenge is even greater than we thought because the boom was even bigger, the bust even deeper, and the effects will last even longer.

November 21, 2011

Very short notice, but I'll be speaking at my alma mater, University of Essex on thursday evening, presenting a paper 'When is a Market not a Market?: 'exemption', 'externality' and 'exception' in European State Aid rules'. I use State Aid rules as an opportunity to develop a particular way of theorising neoliberalism, in terms of different ways of justifying and distinguishing markets. The riddle of neoliberalism lies in its paradoxical notion of state sovereignty, which is something that it both ignores and depends upon. What's interesting about the current crisis, especially in the European context, is that this paradox is now more naked than ever.

November 17, 2011

I have an essay in this week's New Statesman, 'From New Times to End Times', reflecting on the state of capitalism, in the tradition and style of Marxism Today which closed twenty years ago. The article is taken from a forthcoming edition of the ippr's journal PPR, which will be dedicated to examining the contribution and legacy of Marxism Today, including articles by many of its leading figures. This builds on the ippr's excellent recent work on renewing the left's 'political sociology', including Graeme Cooke's Still Partying Like It's 1995. My essay argues:

What Stuart Hall named “Thatcherism” was in many ways a success story, both electorally and economically. A post-industrial path to prosperity appeared to be opening up, analysed as “post Fordism” and the “end of organised capitalism”. The recession of 1991-92 notwithstanding, this new path did indeed deliver substantial growth over the subsequent 20 years, and captured the political imagination. The economic and political conflicts of the 1970s and early 1980s seemed to have been ameliorated via a new ethos of cultural democracy, whereby individuals expressed themselves through taste, consumption and lifestyle choice. The message to the left was to take this seriously and engage with it.

Today, however, conflicts and crises merely multiply, often defying existing logic.We still have no clue as to the micro- or macroeconomic bases of future growth. The cultural egalitarianism of consumerism no longer looks so benign, after televised images of teenagers looting branded goods during the August riots in England. The left feels that levels of inequality are no longer sustainable – and that the opulence and self-gratification of the economic elite have become intolerable – but lacks either the language or the policies to act on this. Where capitalism was coalescing around a series of themes in 1991 – weightlessness, consumption, flexibility – today it is disintegrating but without simply returning to a pre-Thatcherite politics of class. The problem is that we feel less that we live in “new times” than in, as Slavoj Žižek suggests, “end times”.

November 12, 2011

Poppies are providing an excellent annual opportunity to take our nation's temperature. Or at least, our nation's media's temperature. Every November, the imagined community of 'Britain' receives a ritualised cultural audit, by an unholy alliance of the tabloids, advertising agencies, the monarchy and - this time round - the England football team. Somewhere in amongst all of this, ex-soldiers get a look-in, though the results aren't very pretty.

This year it's been especially gruesome. How's this for a clash of illegitimate powers: Prince William and David Cameron have been arguing with FIFA as to whether or not John Terry, Ashley Cole, et al, should be permitted to wear poppies during the hiding they are due to receive at the hands of Spain later on this afternoon. A less appealing bunch of unwanted oligarchs it would be difficult to imagine. If Fred Goodwin were mud-wrestling with Rush Limbaugh over which of them had rightful claim on an old lady's dropped purse, it would be a more dignified and worthy form of political argument than this.

Last year, I felt that the British Legion's advertising campaign was actively re-engineering what was involved in national mouring, reducing it to a form of sympathy and sentimentality, which was locked in the present. The images contained in those advertisements obliterated the past, rather than remembered it. This might help explain how it is that poppy-fever is experiencing a crescendo, at a time in history when the First World War (from where the symbol of the poppy was originally taken) is just fading from living memory. For a teenager today, the First World War is the equivalent of what the Crimean War was to the baby-boomer generation. This is no longer something that one's grandparents can report on.

This enables the symbol of the poppy to acquire a form of timelessness, that enables it to be used in a mildly fascistic fashion, to represent various sentiments and forms of nationalism, independently of any relationship to history. Nationalism always depends on sufficient forgetting, such that a relationship to the past can be reinvented for the purposes of the present and the future. Accurate history or empirical remembering, is an obstacle to nationalism. So how is our imagined community progressing? Here are this year's offerings:

Helen Mirren and Andy Murray are presumably employed here as famous and successful representatives of Britain. Mirren glitters at the Oscars. Murray nearly wins various major tennis tournaments. They are offered as international envoys we can feel proud of. What grates about these posters is the fact that the advertising creatives behind them have entirely failed to eschew their brain-numbingly repetitive tool of choice, namely the pun.

Advertising successfully gets under the skin through double entendre. Every leading slogan has a duck-rabbit element to it, whereby it changes meaning inside the mind, producing a form of psychological tinnitus which continues to reverberate enfuriatingly. 'Enjoy More' (McDonalds), means more enjoyment or more food. Extract any sensible grammar from a sentence and the opportunities only escalate, hence the grammaturgical jingle 'Every Little Helps' (Tescos), whose efficacy is testimony to the psychological power of total nonsense, and which turns its target into a form of idiot consumant.

The problem with performing this trick on behalf of the fallen and the wounded is that it generates some rather horrific forms of equivalence. The statement that 'Our troops are the real stars' only works in this context, because it assumes that the reader already knows that Helen Mirren really is a 'real star'. If a member of the public were depicted saying 'Our troops are real stars', this would carry a single meaning, namely that our troops are real stars. The only reason they have put these words in a Hollywood actress's mouth is because, that way, they're not entirely true. In all honesty, Helen Mirren is a real star, while our troops are anonymous working class boys. It is only because we all, ultimately, know that to be true, that the advertising slogan works at all.

The Murray advert is more absurd. The pun here - and someone in Soho must have hit the Columbian marching powder a little too hard the day this one was invented - is that, ahem, tennis players sometimes 'don't return' a serve. In case this is too awful to fathom, lets be entirely explicit about this: that advert, the one with Andy Murray in it selling poppies, is making a play on words, which compares our feelings towards a tennis player who's just been beaten by an ace, with our feelings towards a soldier who has been killed in Afghanistan. 'Those who don't return'. Oh yes, I get it! Oh, actually, no, I don't get it at all.

So here we are, the proud British of 2011, parading our chosen Hollywood crumpet, alongside our embarrassingly Scottish Wimbledon semi-finallist, in the hope that we'll all join hands and applaud a series of rituals that are being lifted out of history, and plonked into the middle of a football match, thanks to the intervention by an unelected and a sort-of elected political leader. Yep, that's us. See you next November.

November 11, 2011

I've written a concluding article for the OpenDemocracy happiness debate, that I've been editing since the beginning of the year, which summarises the contributions and reflects on the recent ONS announcement of the happiness indicators. You can read it here.

It is now firmly established (contrary to the naive Keynesian celebrations of 2008-09) that the crises of neoliberalism are working in favour of their architects, and not against them. The banks are more powerful, three years after their historic suicide attacks, not less. What is now also becoming clear is that the same is true for neoliberalism's preferred mode of sovereign ruler: the technocrat. Both Greece and Italy are to become nations governed not just via economics (as Foucauldian theorists of liberal governmentality have long witnessed) but by economists. Potentially this is a wholly new epoch emerging, in the interplay between the modern state and liberal economics.

This makes Woolfgang Streeck's recent article in The New Left Review all the more prescient. As he argues there:

There are various ways to conceptualize the underlying causes of the friction between capitalism and democracy. For present purposes, I will characterize democratic capitalism as a political economy ruled by two conflicting principles, or regimes, of resource allocation: one operating according to marginal productivity, or what is revealed as merit by a ‘free play of market forces’, and the other based on social need or entitlement, as certified by the collective choices of democratic politics. Under democratic capitalism, governments are theoretically required to honour both principles simultaneously, although substantively the two almost never align...

In the liberal utopia of standard economic theory, the tension in democratic capitalism between its two principles of allocation is overcome by turning the theory into what Marx would have called a material force. In this view, economics as ‘scientific knowledge’ teaches citizens and politicians that true justice is market justice, under which everybody is rewarded according to their contribution, rather than their needs redefined as rights. To the extent that economic theory became accepted as a social theory, it would ‘come true’ in the sense of being performative—thus revealing its essentially rhetorical nature as an instrument of social construction by persuasion. In the real world, however, it did not prove so easy to talk people out of their ‘irrational’ beliefs in social and political rights, as distinct from the law of the market and the right of property. To date, non-market notions of social justice have resisted efforts at economic rationalization, forceful as the latter may have become in the leaden age of advancing neoliberalism.

It is also worth noting that the march of the technocrats in 2011 is (at least on the face of it) just as startling as the onward march of the investment banks in 2010. Wasn't the financial crisis also a vast humiliation for economic expertise? Didn't the risk modelling techniques, the stress tests and the forecasts turn out to be about as 'objective' as a gut feeling about the Grand National? And can't we now accept that any social scientist who projects an arrogant refusal to discuss their methods, their presuppositions and their own perspective, is ultimately more politically dangerous than the apparently 'post-modern' ones who are frank enough to discuss the interplay of power and knowledge?

Under the new circumstances, the description of economics as a 'social science' becomes less tenable. Economics has undergone various mutations in its time (though of course this would be the last thing that would be discussed in an economics class), from a branch of political theory in the mid-18th century, to something approaching economic sociology in the mid-19th century, to a professional academic discipline by the early 20th century, before descending into mathematical formalism by the late 20th century. The new technocrats, on the other hand, do not - and importantly can not - abide by Milton Friedman's Popperian vision of economics, as the generator of falsifiable predictions. In the face of an uncertain future, the technocrats do not use economics to produce models of risk, but to shape and control it via sovereign powers. These are two separate pragmatic responses to uncertainty as identified by Frank Knight - but Knight never foresaw that economics would be used in pursuit of the latter.

Economics and sovereignty are merging. If Prime Ministers Mario Monti or Lucas Papademos ever turn out to be 'wrong' in their economic analysis, this might, from now on, be beside the point.

November 07, 2011

I am beginning to feel that the 2012 London Olympics will be dripping in post-speculative melancholia, my preferred term for any hubristic financialised excess that was dreamt up pre-2008 but has then hung around since as an expensive embarrassment. Every time I hear Seb Coe's dulcet tones on the radio (he was at it again this morning, explaining the intricacies of some torch or something, in between news items about the collapse of European governments) I feel sorry for a man trapped in a Blairite economic timewarp. They should bury him in a box under a tree in the Blue Peter garden, and dig him up occasionally to find out what it was like preaching business strategy in 2004.

In 2005, when London was awarded the games, the question of why they were desirable wasn't really a publicly legitimate one to ask. The Olympics were a perfect embodiment of every dominant business and political value of the time: they maximised competitiveness, of individuals, neighbourhoods, London and the UK; they were family-friendly and healthy; they were 'delivered' by a well-oiled machinery of public-private collaboration; they would show-case managerial efficiency and budgetary honesty, with 'the world watching'. The core purpose of the Olympics, in a pre-2008 universe, was to synthesise every value of that economic era. Collaboration and teamwork were celebrated - but only to the extent that they further competitiveness (collaboration and teamwork which are not in the service of competitiveness constitute cheating and/or socialism).

What do the Olympics mean today? As I took a train through the grim, nearly-Essex retail tundra of Stratford the other day, I wondered what it could all mean, what value it could still offer anybody. What answers might even sound faintly plausible by next summer? Competitiveness? I think we're all a little too worn out for that. Every claim that has been made for the games, whether fiscal or nutritional, has already turned out to be a lie, and that's before the whole thing has got going, let alone the 'legacy' that it will leave behind for a nation in decline. The £3bn budget, which magically trippled without being classified as an over-run, could have been cooked up in Goldman Sachs' Athens office.

In 2011, public-private collaboration now means something else altogether, and it has very little to do with budgetary responsibility. Instead, it refers to the core, sovereign institutions of the state drawing on all their reserves of credibility, to save the private financial sector from its own inability to speak honestly. Screw 'winning'; there are several governments, institutions and families out there who would accept 'surviving'.

Now that the neoliberal boosterish rhetoric has lost any purchase on reality, what will we see instead? A vast shopping mall, that 'fans' are forced to traverse, simply in order to get from the railway station to the sports stadia, ideally with their credit cards safely cut in half at home. We will witness weird and wonderful sports, whose rules we scarcely understand, and marvel at the contestants' determination in the face of extreme pointlessness. A giant Anish Kapoor sculpture has gone up, an ironic coda to the era of iconic 'signature' urban structures, which once acted as the bureau de changes for the conversion of financial into cultural capital and back again. We will hear half-hearted jingoism about nation and capital city, but with a sincerity vacuum at its heart.

Like the Occupy protests, the Olympics has no demand, and no obvious point. From now on, it just is. But as Gary Younge points out of the protests:

the very things that make it cumbersome make it authentic. Its leadership and its base are one and the same thing. No corporate money sustains it; no cable station is dedicated to promoting it, no individual speaks for it.

Maybe the Olympics should aspire to a similar authenticity, offering nothing but its branding, its monolithic structures and its vast cost, without justification or any agenda. It should be impossible to ignore, but entirely reticent as to what it wants. An honest Olympics would be silent, offer no explanation for its wastage, its purpose, because it no longer has one. Seb Coe would take to the airwaves, and be entirely mute. This could be the symbolically-empty games, and our dwindling reserves of optimism could then be diverted where they are more needed.

By next summer, the Olympic Park will be a relic, before the games has even opened. It will be a testimony to the power and danger of financial error and exaggeration. Legacy? The Olympics park is already a legacy, before a single drugged-up Ukrainian has hurled a javelin in anger. It's a legacy of the last Cool-Brittanian gasp of post-imperial bravado, which, in Thatcher's wake, lured our political classes to this type of grand-standing in the first place. The public will be able to wander it, marvelling at the people who possessed legitimacy and credibility - Blair, Brown, Coe, Diamond, Goodwin - a mere five years earlier. Like an ancient temple, much of the fascination will not be with what it still conveys today, but the fact that anybody ever inhabited such a reality in the first place. Post-speculative melancholia will accompany every declaration of triumph, and ever paean to the spirit of London or sport.